I'm 42 married with 2 kids. I have $1.5M term life purchased through an irrevocable trust and my wife has $500,000 of term. We have no mortage, car payments and college savings are basically taken care of. We have high level of current income and both plan on retiring around age 50 to 55. Does a $1M whole life policy make sense for me?
2007-10-17 04:35:23 · 10 answers · asked by AJS 1 in Business & Finance ➔ Insurance
You haven't named a GOAL for the whole life to accomplish. Or the term life, for that matter. What's the GOAL?
I can't think of one, unless you want to leave your kids a fat inheiritance in 30 years, and don't save well on your own. Which doesn't sound like the case.
2007-10-17 06:06:09 · answer #1 · answered by Anonymous 7 · 0⤊ 0⤋
In my opinion, absolutely not. By the time you retire, will you have accumulated enough assets to cover your family's needs, and will your wife will have enough to live on comfortably for the rest of her life? If so, I don't see any reason why you would need any additional insurance past the time you retire. A 10-year level term policy could be a good choice assuming you need to insure against your own death and the resulting loss of income between now and when you retire.
In any event, I see no logical reason to get a whole life policy that builds cash value. It's only going to cost you more than term, you don't need the cash value, and the period where you need the insurance protection is fairly short (from now until your retirement). Assuming you need more life insurance at all (and you may not), term would seem to be a better choice.
2007-10-17 04:45:54 · answer #2 · answered by likepepsi 7 · 1⤊ 0⤋
Are you looking at life insurance as a as a tool to pass on wealth to your heirs tax-free? If so, you might consider a single-premium life insurance policy. As the name suggests, the premium is paid upfront in a lump sum. The policy covers you until death. At your age, the death benefit can be two or more times the amount of the single premium. In most states, the death benefit is exempt from estate taxes.
Some single-premium policies can include a provision to pay for certain kinds of medical care, such as nursing home care or hospice care. In this sense, the policy functions as a kind of long term care insurance. Any money remaining in the death benefit at the time of the policyholder’s death is passed on to the beneficiary.
2007-10-17 11:15:12 · answer #3 · answered by Anonymous · 0⤊ 1⤋
Sounds like you have plenty of coverage. Just make sure the face amount you have currently is enough to cover what you want protected and that the term length is correct to cover those items.
Just invest more in the markets. Get ready to retire. Have a plan for everything financial.
2007-10-17 08:48:14 · answer #4 · answered by PFS rep 3 · 0⤊ 0⤋
You're not really clear on whether you want to own the policy or have your irr. trust own it.
I assume the irr. trust owns the term policy on you because you want to remove it from your estate. Why would you then want to increase your estate by $1m if you individually own it?
Whole life policies really excel at accumulating guaranteed cash value. If you are suggesting a whole life policy in your irr. trust, what are you going to do with all that cash value once it's in your trust?
You really need an advisory team that at least includes a financial planner, attorney, and an insurance agent. Please keep in mind that there are lots of other types of permanent life insurance besides whole life.
2007-10-17 05:37:57 · answer #5 · answered by aaron p 5 · 0⤊ 0⤋
Whole Life has great advantage. Most people diversify their investment portfolios, but not their insurance. I think you should have a mixture.
Whole Life is like a BMW and Term is like a KIA. They both do the same thing cover you for a death benefit. But do not say the KIA is better than the BMW.
Whole Life will do 4 Basic things for you
1. Provide a Savings, You will have all your premiums back in 15 years
2. Provide a tax deferral
3. Pay the premiums if you are disabled and if you are disabled for life pay the premiums forever
4 Give you a death benefit.
2007-10-17 10:39:06 · answer #6 · answered by Greg R 2 · 0⤊ 2⤋
A whole life policy has never made sense for anyone. Only term insurance should be purchased. It's your money against your life, just like auto insurance. Here's a little tip: Never buy life insurance from a life insurance salesman because he is self-serving. Buy it from a multi line agent who has other interests as well. Always buy Term. It's a no-brainer.
2007-10-17 04:46:00 · answer #7 · answered by Irish 7 · 0⤊ 1⤋
Premium would be about $4500.-/yr , return upon surrender
(in 20+ yrs example) = 4500 x 20 minus policy fees so ..
things to consider:
1. when does your term insurance expire? if it's when your only 70yrs old.. whole life might make sense
2. what are your current investments yeilding? if you could get 7-10% on 4500 thats pretty good.
I personally feel whole life is way overpriced.. but if you really understand the product, it might be right for you.
2007-10-17 04:50:10 · answer #8 · answered by jennie 4 · 0⤊ 1⤋
Depends...If you have maxxed out annual contributions to retirement accounts, 401k's etc.. an overfunded permanent policy may provide you with an additional type of deferred savings vehicle.
If you are going to consider this, also look at variable universal life as well as universal life for comparisons.
2007-10-17 07:48:45 · answer #9 · answered by Anonymous · 0⤊ 1⤋
You are overinsured, and certainly do not need more. Put your money maybe into a 2nd home if you care to, or use it for additional retiirement.
2007-10-17 08:11:31 · answer #10 · answered by Mr. Prefect 6 · 0⤊ 1⤋